Landlords are continuing to enjoy rising rents with figures climbing for the third consecutive month, a new report has revealed.

Paragon Mortgages' May Buy-to-Let Index said rents rose from £9,651 in March to £9,953 in April - giving an 11pc increase over the past three months.

It means the rate of return on landlords' investments has risen from 7.22pc in March to 7.27pc in April, the highest level since December 2003.

And the North is the area reporting the highest yields at 8.73pc - despite a drop from 8.93pc in March.

The average property value in the region is now £62,465, an increase of almost 10pc.

John Heron, managing director of Paragon Mortgages, said: "Landlords have been seeing steadily rising rental incomes since the beginning of the year, helped by good levels of tenant demand which is in part attributable to the ongoing impact of affordability constraints on first time buyers.

He added: "After some softness in the autumn and winter, the trend in landlord yields now seems to be clearly upward as investors achieve higher rents.

"This reflects strong tenant demand in most areas for the right type of property, which tends to be the modest home targeted by young professionals, sharers or key workers.

"Prices paid by landlords continue to climb, but the average rental property continues to be cheaper than the national average."

* FOR the second quarter running, tenant demand in the private rented sector is increasing.

This is reflected in the decrease in available rental stock and the increase in the number of new tenancies arranged by ARLA - Association of Residential Letting Agents - member letting agents.

The ARLA Review and Index which includes the ARLA Investor Landlord Survey, conducted at the same time, shows that only 2.7pc among buy-to-let investors expect to sell their properties if property prices fall while 59pc expect to buy further investment properties in the next twelve months.

Investor landlords remain committed to the long term, with the life expectancy of their investments averaging 16 years.

Nearly half of these investors (45.8pc) are aiming to create a nest egg for the future and 43.2pc hope to benefit from both rental income and capital gain.

Chairman Robert Jordan, said: "These figures clearly demonstrate that the buy-to-let investor has become a stable fixture of the private rental sector. What is good for the rental market is also good for the investor landlord."